tv Nightly Business Report PBS April 16, 2015 7:00pm-7:31pm PDT
. this is "nighlty business " with tyler mathisen and sue herera. goldman's goalen report. what fueled the company's best quarterly results in years. market debut. ipos are back but there are three things investors need to know before buying into them. industry after shocks. why oklahoma finds itself at the epicenter of a debate over fracking and earthquakes. all of that and more tonight on "nighlty business report" for thursday april 16th. good evening, everyone. and welcome. i'm sue herera. tyler mathisen my partner is off tonight. it was all green for some of america's bluest blue chip companies. delivering better than expected earnings. and in the gace of goldman sachs, the numbers were blow jout. smashing through estimates,
echoing numbers by other big banks. in goldman's case a fuelest best quarterly numbers in years, confirming the strategy of a business model critics said was too risk yip in the wake of the financial crisis. investors, however, were expecting the strong numbers and after a recent runup they sent the stocks slightly lower. mary thompson has the numbers. >> while in the midst of the l crisis goldman sachs numbers packed a punch. >> i thought the results were quite impressive. >> the new york based bank posted the highest quarterly revenue in four years and highest profit in five. thanks to the profit in trading business which generated more than half of the billion dollars in revenue. on a call, ceo harvey swartz said the higher rates in the u.s. and lower rates in europe spurred clients to take action.
>> the largest economies had a significant impact. >> all of the goldman businesses investment banking, agoet managements and the firm's investment and lending portfolio contributed to the more than $2.8 billion in the first quarter benefits from a tax rate and the result an increasing measure of roe hitting almost 15%, prompting praise rating goldman as a neutral. >> i thought it was higher quality from goldman this go around than other quarters. >> and many are seeing goldman to vindicate and they didn't risk trading and bulk up on steadier businesses like asset managements, something some
critics felt they had to do. and one quarter does not make a trend and while strong in one quarter could still make it volatile. >> absolutelmary stay there because we want to talk to you about american express results out after the closing bell. reporting a 6% crrys in profit to $1.48 a share, beating estimates but revenues were light at $7.159 billion and a 3% decline from a year ago. the reaction in the stock was choppy. so as you can see from the charts we did see some gains but the volatility was there. what did you make of the quarter. you know the company well. what was the big takeaway you had. >> the company is helped by the expense management. and that helped in the first quarter along with the strong spending by customers but it faces head winds, the continuation of the strong dollar and the price of gases and the goal with costco.
the company has to invest in new growth initiatives going forward so it might have leverage on the growth side meaning investors will have less to look forward to this quarter or this year and the company did say the company will he earning flat going forward and the earning might not be available as they invest in the growth business. >> mary thompson appreciate it. and citi reports the highest report in nearly eight years. the bank has been cutting cost to simplify the structure and selling off noncore business. an analyst called it the biggest turn around for the large cat growth and shares rose 1 1/2%. and stocked sold out despite the positive earning news. we'll have more on that in a moment. at the close the dow jones fell nearly 7 points to 18,105 and
the nds gave back three and the s&p 500 dropped one point. united health reported better than expected first quarter results. that made the stock the top performer on the dow today with a gain of 3.5%. and we have more on what is driving the health care bell weather. >> united health group expected to see higher head cal -- medical costs with adding half a million customers with expensive demands for hepatitis c drugs but instead the overall costs fell. >> they have well controlled hospital costs particularly on the in-patient side and receiving relief from the hepatitis c costs last year. >> they raised their confidence of the acquisition of catamaran
will be a boost to the i.t. unit and they can continue to manage cost even as more americans have access to medical compare and hospitals are reporting stronger volumes. gupta said it is benefiting the industry as a whole. >> i'm a firm believing in the goldilocks investment. i think it is right for payers and providers. on the payers they are not seeing an uptick. and the providers are seeing the benefits of the affordable care act. >> united diverse position the insurer well if medical costs rise. the large scale makes it a force in health care and sets the tone in an industry that is focused on managing costs. >> but this is the start of a really encouraging transformation and an industry that through a variety of carrots and sticks that have
been brought to bear an industry that is performing more efficiently. >> one potential setback for unite pd an the insurance industry is the case before the court is subsidies on the forward exchange and a turnover is likely to weigh heavily on the sector. bertha couples, "nighlty business report," new york. the ceo of the biggest drug companies met in washington, d.c. for the industry annual board meeting. one big top of discussion is deal making and someone is on the hunt for an squigs. >> because we want science or where we have a leadership control right now like diabetes or vaccines or ininfectious diseases or cancers. so in areas where we are leading or aspire to lead going forward, not interested in the very large
consolidation-type deals. the ceo of rival drug maker pfizer is interested in expansion. investors were paying attention to the fed speak out there today as the market looks for clues as to when and by how much the central bank may hike rates. dennis lack hart favors a rate hike later in the year rather than in june. boston fed president eric rose gren said the criteria for rate hikes have not been met. and loretta mester said any rate likes should follow a grat you'll path. and the vice chair of central pank stanley fisher said he is watching the economy closely. >> where most people think it will happen this year but you don't want to get more deaf not than tha on how the economy develops. we'll do it at the best possible time and we would like to see the economy grow again and at a decent rate.
>> and fischer said an economic rebound is under way following a weak first quarter. opec reporting a sudden surge in march oil production. that extra supply being added to an already oversaturated market weighed on the commodity but then prompts in yemen and then closing at a high of $61.75. oil and gas production has quickly become oklahoma's largest industry but now some scientists are questioning whether the increase in earthquake activity is related to part of the fracking process. morgan brennan reports from craig, oklahoma. >> struck prague oklahoma was the largest in history. >> everything was shaking and it was scary. >> and though highly debated,
many point to the energy industry as the culprit. because the number of earthquakes rattling oklahoma has urged. the state averaged one to two quakes per year and now it is one to two per day. >> they increased in 2009 and in just a few stated and a few places in colorado southern arkansas and texas and oklahoma. >> they say most can be linked to oil and gas production. but not fracking but the disposal of wastewater the toxic byproduct disposed of in the ground, in wells far away from the drinking water supplies. >> it has been done for years and years but that changes the fluid balance at depth in the gio logic formation and that is what has the poeshlt for
triggering earthquakes. >> oklahoma has been hit the hardest because of the fact that billions of barrels of wastewater have been pumped. they don't deny the possibility of a link for some possibility. but kim hatfield said what is lacking is specificity, locating the exact wells that could actually be triggering these quakes. >> that is an issue. we need to get that right. we don't want to paint everybody with the same tar brush. >> it is an issue resource strapped regulators in man states are strangling to address. in oklahoma the corporation commission released a directive that prove that wells haven't been drilled into fault riddled bedrock. >> t fault is on the drillers to prove they are not below the arbuckle. >> and what happens if they are
too deep. >> then they do a flood back and that is making the hole shallower, and bringing it back into the formation, which is the arbuckle. the cost can be 100,000 dollars or more. >> and they are reviewing applications more carefully. >> how much are there? >> we have approximately 80 that are backlogged. >> do you think that has an effect on production that they are on hold? >> it probably does. >> and that is a question remaining, what this means for oil and gas production which is a biggest provider of jobs in this state. and some residents have filed lawsuits against energy companies for personal damages, including one here in prague following the 2011 earthquake. it is a highly contested case and when it could go before the supreme court this year have a big impact on this entire debate. for "nighlty business report," i'm morgan breggan in prague
oklahoma oklahoma. and still ahead, a handful of companies making their debut but there are three things investors need to know before buying an ipo. congressional leaders unveiling a bipartisan trade bill that could have big economic implications. the deal reached today gives the president fast track authority to negotiate the trade pack with other nations. pimco is outpacing most of the rivals nearly six months after bill gross's leave of the fund. the fund returned 3.7%. ahead of 92% of the peers and
the benchmark. and tomorrow on "nighlty business report," we'll speak with scott mather the man who runs pimco's total return fund. it looks like the ipo market has been jolted back to life. after a slow start, last night we told you that was all about to change and it did. shares of etsy surged, more than doubling at one point. and an an interview, the ceo said it is focused on growing globally. >> 30% of the shares are international. we are focussed on a few key countries and our strategy is to build mashlgt globally. the countries are balanced buyer and seller eco-systems, so canada u.k. western europe and we are focused on those countries. etsy closed up 87% to $30 a share. party city the discount
supply store took party to wall street today. investors embraced the shares and the ceo said what makes that retailer attractive is the unique structure. >> we really are the traditional retailer. we have three legs to the store. we have the manufacturing operation, the wholesale operation and thretail operation and that is a unique paradigm because for our manufacturing operation it is the largest customer is the wholesale customer and for the wholesale operation the retail business is the biggest customer but not the only customer. >> shares rose 22% to $22.77. and one of the biggest trading firms virtue saw its shares jump following the release of flash boys by michael lewis. they brushed off high concerns sending shares higher by 16%. and now that the ipo market
is heating up investors are itching to get in on the action. but our guest said there are three things to consider first. joining us are kathleen smith, a manager of ipo focus exchange traded funds. good to see you, kathryn. welcome. >> thank you. >> and let's start with your thumbnail sketch of the ipo market. it seems like it is heating up more. >> it is heating up and i get investors don't have to wait for uber and air b and b to get it into the market. we had it today. and after starting out the year on a slow foot those investors that have owned a basket of ipos already traded we have the renaissance ipo index, those investors are up 10% so far this year. so they are feeling pretty good about what is coming up in the ipo market. so we saw some very good results today.
etsy just incredible. it did help to have a very loyal set of community that was involved in purchasing shares in the ipo. virt u will pay a big percent and party city i think investors were impressed by the expected growth there. >> and let's talk about if you are the average retail investors with a longer horizon and you want to get into the ipos, you've given us three bullet points before you take that leap. you take a look at revenue and earnings correct. >> certainly. and now we're talking about an individual stock. so here you have to be very careful. and would say the -- i would say the first thing is be careful about story stocks. look at the company and make sure it has revenues and if no earning, at least some clear path to earning so starting out by saying avoid story stocks and look for the earning. >> and how much of the portfolio
you put into an ipo can be critical correct? >> yes. we would highlight that you should not bet the ranch on any individual stock. certainly have a diverse potential of stocks if you are going to choose to go one by one. >> you know the last point i think is one that probably will be hardest for most investors because some of these ipos are so talked up and talked about and for instance let's take etsy. it has a very loyal following. so you say don't get caught up in the hype. but it would seem to me that would be extremely hard to do? >> that is really the challenge for investors, to take one big deep breath and take a look at it without all of the media attention and the first day of trading, especially on one that has risen so much as etsy give it time. because etsy will have to show particularly this company, through quarterly results that it can continue the strong path of growth. >> so you would not necessarily recommend that an investor if
they could get in on the first day, do so? >> we would not on a stock that has such a big jump. we would be looking at taking a step back and waiting for it to trade a little bit. the ones that have traded more recently maybe 13% or so increase you might take a look at that and if you felt it was appropriately valued -- there is no formula. if there were we would all be following it. >> kathleen thank you. kathleen smith with renaissa capital. microsoft and yahoo are teaming up on search and that is where we begin tonight's market focus. the companies are redoing the search partnership with changes. the new agreement allows flexibility on how ads are managed. microsoft shared to 42.16 and yahoo rose a nickel to $45.78. and black rock saw investments rise as cash flows were strong
across all classes. revenue did fall short of estimates because of weaker fees tied to the stronger dollar. shares were off 1% to $372.18. philip morris posting a top ant bottom line showing top lines. they did see profits fall from last year as they were pressured by the stronger dollar. still the stock popped to $84.96. mattel reported higher cost. and a stronger dollar weighed on its sales. they are trying to revamp as saled for some of the toys like the iconic barbie doll have slowed. and shares were volatile in after hours trading and it was off $25.27 in the regular sale. the number of americans filing applications for unemployment rose but remained below 300,000.
but we got a sluggish read on the housing market as ground breaking on new homes rose far less than expected in march. up to just 2% from a month earlier. but one region where the housing market is red hot and getting hotter is san francisco. and today a new report shows the median price of a home in that city topped $1 million. josh lipton has more. >> if you want to buy a home in the san francisco bay area you better move fast and have cash in hand. the median sales price in the san francisco metropolitan area which includes san francisco, san mateo and marrin counties have topped $1 million for the first time a nearly 20% jump year over year according to red fin, a real estate brokerage. >> we've been dealing with this market since the beginning of 2012 and seeing this rise year
over year over year and for someone in the business all day, every day, i'm not terribly shocked. but just to say a $1 million median price in the san francisco metro area is a little bit shocking to say. >> the seller of this $1 million house actually bought another home before putting this one up for sale. how come? because the market is now so competitive that she was afraid she won't be able to find a new place to live. in march, nearly 50% of homes sold in 14 days or less. and buyers were willing to pay up for their dream homes. more than 70% sold above the listing price. that is in part due to the lack of inventory with a number of new listings down 12% year over year. and real estate agents attribute the sky-high prices to demand from a thriving tech industry. unless there is an increase in inventory, real estate experts don't see this trend changing.
if anything it is spreading with nearby san jose california nearing the million dollar mark as well. for "nighlty business report," i'm josh lipton in san francisco. still ahead, the big money behind the movie that revolutionized hollywood a decade ago and remains a multi-billion dollar empire today. and here is what to watch tomorrow. general electric one of the most widely held stocks will report its earning. and we'll have the consumer index report an inflation indicator and the consumer sentiment. that is on the agenda for friday. ben bernanke is taking on a new
role. as first reported by the new york times, the former chair will revise the $25 billion hedge fund citadel. and will offer advice on financial issues and meet with the fund investors. and finally tonight is the force is with the thousands of fans desending on anaheim, california the most lucrative in the industry for star wars and there is still big money behind the famous series. >> star wars celebration drawing 40,000 fans for panels autographs exclusive merchandise and even a jedi training session. >> what wants to see a new teaser? >> the main attraction the future of the franchise. director j.j. abrams unveiling a new teaser for the force awakens in theaters december 18th.
>> i've never had more fun in my life working on anything and the opportunity far outweighs the risk of this and i can't wait for you to see it. >> and fans were excited by what they saw. >> it was loud. >> everyone was super excited, cheering and standing and yelling. all of it. it was really saw some. >> just the craziness, mayhem. it is amazing how many people are here. >> you want to see more and more and they end it showing han and chewy together. >> it is much larger than it ever was and there are markets that weren't existent before and china being an example of that. and we're fairly confident this film will be well but way too soon to make redictions and not making any in public. >> and they've been working hard to reassure die-hard fans like the one here that the 40-year-old franchise is in good hands under new ownership. based on the reaction so far the disney ceo bob ieger said he is
confident that the $4 billion acquisition will pay off. >> i'm sure george lucas will be quite happy about the investment made. >> with devoted fans like the ones here they are working to build the star wars presence in the marks to build revenue and the potential to expand the star wars university to tv. i'm julia bors ten in anaheim, california. >> and that is "nighlty business report." i'm sue herera. we'll see you tomorrow.
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